General Motors Loses Even More Money

I thought this whole fast-track bankruptcy thing was supposed to have fixed General Motors once and for all.

I mean, isn't that what we were told? That with the changes foisted upon the company by the Obama administration -- which included, let us remember, the complete destruction of shareholder value and a rather non-standard interpretation of bondholders' rights -- the New Improved GM would be able to compete on a fair footing with the other big automakers of the world?

Remember all that?

Well, guess what, fellow taxpayers: GM -- our GM -- is still a loser.

Yep, still torching money
On Wednesday morning, General Motors finally released its much-delayed fourth-quarter and 2009 year-end numbers. For the year -- which started on July 10, the date of "New GM"'s emergence from bankruptcy -- the much-vaunted New GM posted a net loss of $4.3 billion, with $3.4 billion lost in the fourth quarter.

Now, to be fair, there are some asterisks and special cases that might make that number look worse than it really is -- to quote GM's press release, that loss "includes the pre-tax impact of a $2.6 billion settlement loss related to the UAW retiree medical plan and a $1.3 billion foreign currency remeasurement loss."

That "foreign currency remeasurement loss" appears to be accounting-speak for "our currency hedging failed to cover us when the dollar strengthened versus the Euro." They also took a $300 million hit for costs related to winding down the Saturn brand, and a few other things here and there ... the upshot is that excluding all the special items, they still lost several hundred million dollars on operations.

That's not a very big loss for a company of GM's size, even the leaner-meaner New GM. But it's still a loss, one that comes after the President of the United States himself arm-twisted who-knows-how-many different parties into giving GM every possible advantage.

And you know I've got to say this: Ford (NYSE: F  ) -- y'know, the guys who didn't have the POTUS doing all that arm-twisting and bondholder-blitzing on their behalf -- managed to make money in 2009.

Honda (NYSE: HMC  ) and Toyota (NYSE: TM  ) made money during the two quarters of New GM's existence, too.

Apparently GM's new-and-improved still -- still! -- has a ways to go.

But there are signs of hope -- I think
To be fair, it's not like New GM emerged into the world on July 10 as a completely finished product. There were divisions to sell, bungling CEOs to dismiss (and then rehire), and a whole lot of new accounting to figure out and reconcile -- the new company is a completely new entity, accounting-wise, which means that a direct comparison of its assets and liabilities to Old GM's isn't really possible.

Not to mention the ordinary boring challenges of running a far-flung global industrial giant in a hypercompetitive industry during an epic economic downturn.

I did, though, expect GM to eke out some sort of token profit for 2009, or at least for the fourth quarter. But they didn't really try to spin the loss, and that's a good sign, in a way. During a conference call that GM held for media and analysts this morning, new CFO Chris Liddell was at pains to downplay GM's successes, saying that he wanted to reverse the practice of "overpromising and underdelivering" going forward.

As Liddell noted, that has not always been GM's approach in the past. Liddell said some other things that made me think that the long-hoped-for cultural shift at GM might finally be taking hold:

  • Market share is now "an output, not an input" -- in other words, GM's historical obsession with winning points of market share at whatever cost is now, well, history.
  • That the company's goal is to return to an investment-grade credit rating, with a frank acknowledgement that that is likely to take several years.
  • That the much-anticipated GM IPO would happen when GM, the equity markets, and the state of the global automotive business were ready for it to happen, and GM wasn't interested in setting any sort of deadline.

Maybe GM is on the right track after all
GM's 2009 included a high-speed bankruptcy proceeding, a major management shuffle, and then a second major management shuffle. GM's Executive Committee has 13 members, and 12 of those have joined the company or changed positions since last July. With Vice Chairman Bob Lutz set to retire on May 1, one more piece of GM's high-profile old guard will be gone.

Liddell said that the company remains committed to paying back its U.S. and Canadian government loans "by June of this year, significantly ahead of the original repayment schedule." And he hinted that first-quarter results -- which will be released in a month, he said -- would show a brighter picture.

Speaking as one of the several hundred million people who funded GM's bailout, I certainly hope so.

Fool contributor John Rosevear owns shares of Ford. You can follow his Foolish twittering at @jrosevear as he continues to sort through the ongoing global auto shakeout. Ford Motor is a Motley Fool Stock Advisor pick. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 07, 2010, at 5:43 PM, Azcherrie wrote:

    Really goes to show you how much CNBC will pump anything of this Administrations' actions "UP" because this morning very early the talk about GM was glowingly positive and GM would be paying off ALL the government debt, possiably by June! Wow! Not only that but they did something that is wonderful toward their first step to go public, again. I thought to myself over coffee that they can just go public with their new IPO without my money. This government will be squarely in our faces soon enough with higher taxes. Oh, I forgot, it was all Bush's fault. Whatever.

  • Report this Comment On April 07, 2010, at 6:42 PM, plange01 wrote:

    the bankrupt disgrace GM must be forced to sell its remaing assets repay the wefare US taxpayers gave it and close...

  • Report this Comment On April 14, 2010, at 11:53 AM, baldheadeddork wrote:

    GM...oy. They've made some good moves in the last year but they were so effed up before. Bankruptcy didn't solve their weak product line problems, it didn't give them back the last few years when they focused on performance cars and truck-based SUV's when they paid attention to the car business at all, it didn't fix their entrenched, oblivious management and it didn't do anything to resolve their problems in overseas markets.

    Saving GM (a decision made by the Bush administration, btw) was a good decision for the overall economy. If that domino had fallen at that point in 2008 it would have caused a major earthquake across the rest of the economy, including the destruction of a lot of otherwise viable companies and jobs that just had the misfortune of being too close to GM. There were a few moments in 2008 when a different choice could have pushed us quickly into a second great depression, and the collapse of GM and Chrysler are one of them.

    My GM bellwether since the start of this has been Opel. No automaker can afford to ignore China, but Europe is much more important to GM right now. It's about platform development. With a strong presence in Europe, GM can share US platform development costs almost directly with the second-wealthiest market in the world. You can't do that with China now or for the foreseeable future. Without Opel, GM has to put all of the development costs for US models on the US market, and no automaker can afford to do that. Without Opel, GM has to look for a partner to share development costs. This is why Chrysler had to find a partner before the Daimler deal. That could be the fate for GM if they lose Europe.

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